The ability to generate induced pluripotent stem cells (iPSCs) from skin fibroblasts and other mature cells and then to drive them to distinct lineages brings closer the promise of cell based therapies. Here we propose to test the feasibility of using iPSC-derived endothelial progenitor cells (EPCs) alone or in conjunction with hematopoietic stem cells (HSCs) to induce restoration of lung endothelial barrier function and regeneration of lung vessels after lung injury induced by sepsis. We will also define the molecular and cellular mechanisms mediating endothelial barrier and vascular repair induced by the iPSC-derived progenitors. The possibility of using iPSC-derived progenitor cells represents a quantal advancement over current approaches employing the difficult to obtain and controversial ESC-derived cells or mesenchymal cells with consequences and short-lived humorally-mediated actions. However, there are fundamental questions concerning the use, safety, and mechanism of action of iPSC- derived cells, which this proposal hopes to address. These questions include do these progenitors cells have a memory of their origin, do they function as effectively as ESC-derived progenitor cells when differentiated into EPCs, are their effects secondary to engraftment in the injured lung niche and/or humoral mechanisms, do they repair the injured endothelial barrier and lung vessels and if so how. The studies are based on our ability to differentiate iPSCs to a relatively pure population of EPCs (which are positive for both Flk1 and VE-cadherin markers) and are characterized by their ability to form an endothelial barrier and produce blood vessels. We propose the following aims: Aim 1, To address the endothelial barrier protective and vascular regenerative potential of mouse iPSCs differentiated into EPCs and HSCs; Aim 2, To determine the role of iPSC-derived EPCs in restoring lung microvascular barrier function and fluid balance in sepsis; and Aim 3, To determine the role of iPSC-derived progenitor cells in mediating microvascular regeneration after lung vascular injury. These studies will be made using diverse approaches requiring the efforts and expertise of a team of outstanding multi-disciplinary investigators and consultants, with the hope of providing the scientific rationale for iPSC-based therapy targeted against acute inflammatory injury.